WILMINGTON, Del. — Tom Vari’s lighting suppliers began mailing him warnings about tariffs last fall. They varied a bit in dates and percentages, but they all said the same thing: Very soon, your prices are going up.
Mr. Vari owns Brandywine Lighting Gallery, a 2,000-square-foot independent showroom on a busy highway north of Wilmington. Almost everything he sells is made in China, meaning that since September, his products have been subject to a 10 percent tax on Chinese imports levied by the Trump administration. So far, Mr. Vari has largely absorbed those costs, by accepting lower profits. But he — and his suppliers — say they won’t be able to shield customers from dramatic price increases much longer.
President Trump insists that his trade war will make America better off and that until it’s resolved, China is paying billions of dollars in tariffs to the United States. But it is small-business owners like Mr. Vari, and his customers, who are largely footing the bill for Mr. Trump’s tariffs. As the trade war reaches into its second year, companies and consumers across the United States are growing weary. Small businesses like Brandywine Lighting have been forced to adapt to new economic realities brought about by Mr. Trump’s trade fight with China, Europe, Canada and Mexico and those companies are now beginning to chafe as the fight drags on, putting their profitability at risk.
The United States and China are moving closer to a deal that would roll back tariffs on both sides of the Pacific, while requiring the Chinese to buy more American goods and make some changes to its trade practices. While details are still being discussed, the agreement does not appear to require the sweeping changes to China’s economy that prompted Mr. Trump to begin the trade war.
For Mr. Vari, a resolution could not come soon enough. If no deal is reached, he is worried that he will be priced out of the market by bigger competitors who can more easily absorb the tariffs costs and not pass them along to customers.
“I have to make a decision, if I am going to raise my prices, or I’m going to hold my prices, so people realize I’m trying to help them,” Mr. Vari said. “Help only goes so far, when you’re a mom-and-pop store like this.”
Mr. Trump initially imposed tariffs on $50 billion in Chinese imports last spring, in retaliation for trade practices that Mr. Trump said hurt American jobs and industries. He added tariffs on an additional $200 billion worth of goods in late September, including on many home goods such as lighting supplies. The president initially threatened to raise tariffs on that second tranche to 25 percent from 10 percent on March 2, but much to Mr. Vari’s relief, the president agreed last month to delay that increase, citing progress in the talks.
So far, the tariffs on Chinese goods have yet to translate into large price increases across the United States economy: Researchers at the Federal Reserve Bank of San Francisco estimated that China tariffs have added 0.1 percent to inflation for consumers and 0.3 percent for business investment goods.
But there are signs that the tariffs have raised prices for Americans who buy imported lighting. The Labor Department reports monthly inflation statistics for “clocks, lamps and decorator items” in the United States. Like many consumer goods, those items have experienced steady deflation over the last decade — meaning they’re either getting cheaper, or they are improving in value, or both. From 2008 to 2018, the Consumer Price Index for those goods fell by an average of 6 percent a year.
That trend reversed once tariffs took effect. From September of 2018 to January this year, the price index rose by 2.7 percent.
A much sharper increase could be on the way, if the letters from Mr. Vari’s suppliers are an indication.
He has been collecting them for months here at his store, which employs four full-timers and one part-timer. The showroom is packed with hundreds of chandeliers, floor lamps, bath fixtures, bed fixtures and glowing guides for outdoor walkways. There is no warehouse attached, which means he stocks one, maybe two, of everything customers see here. He has stacks of catalogs they can order from if they’d like more options.
In an industry increasingly dominated by online retailers and big-box stores, Brandywine’s business model is customer service: Employees here will spend hours, if needed, helping customers decide on the right fixture. Those on the fence can take a light home to try it out, no obligation to buy.
Still, Mr. Vari must keep his prices competitive — and his margins healthy enough to pay his bills. That’s why the letters from suppliers concerned him this fall. “Price increase announcement,” one read, explaining that the September wave of tariffs would push up costs of several brands by 6 percent. “I can only hope that the trade war ceases before another 15 percent tariff increase goes into effect,” another said. Some of his invoices began breaking out a “tariff per unit” so Mr. Vari could see what the trade war was already costing him.
In the early letters, suppliers said they were absorbing some of the tariff costs themselves. But they have increasingly warned store owners to stock up on inventory ahead of any further escalation, which the letters say will be almost entirely passed on as price increases. Big-box retailers have the money and the shelf space to stock up. Mr. Vari does not.
He has shielded some, but not all, customers from price increases so far. The decision is all about margins. Mr. Vari said he couldn’t afford to absorb tariff costs on everyday home lighting, where industry competition is higher and profit margins are already low. Their prices have risen in his showroom, so that every sale does not actually cost him money.
Mr. Vari’s bigger margins come from large-scale lighting projects, like kitchen renovations and landscaping. He has not raised prices there yet, because he does not want to drive away customers, viewing it as a trade-off between lower profits today for a larger clientele in the long-run. If the tariffs rise again, however, he will have to raise those prices.
“We’ll still be O.K.,” Mr. Vari said, “because I won’t be a pig about it.”
But he worries, he said, about “customers never pulling the trigger” if a large project suddenly costs $1,000 more than it would have.
Mr. Vari has been in the lighting business, in one way or another, for 40 years. He recalls when a large share of the products he sold were made in the United States. That was the 1980s, before the industry migrated to China.
What is left of the domestic lighting industry today, he said, is so high-end that he cannot afford to stock it. “Great products,” Mr. Vari said. “But the whole idea of bringing the industry back here? That’s what it will be. High-paid people. High-paid producers. And only the rich will be able to afford them.”
Mr. Trump’s promises to bring that type of manufacturing back to the United States are “political bullcrap,” Mr. Vari said. “Some people believe that just because Trump’s pressuring China, we’re going to be an industrial powerhouse again. It’s not going to happen.”
Mr. Vari recently warned customers about the impact of tariffs in a social media post, where he said Mr. Trump’s actions were going to make lighting more expensive. It drew immediate criticism from Mr. Trump’s supporters. “The haters came like that,” Mr. Vari said. “I’ll never do a post like that again.”
Instead, he is spreading the word about price increases in traditional small-business fashion: owner to customer, one person at a time.